The Nigerian Education Loan Fund (NELFUND) has begun testing a new payment system designed to prevent students from paying their school fees twice and reduce delays in processing refunds.
The system, known as a tokenised payment system, will allow students to authorise payments directly to their institutions through tokens linked to their respective schools, instead of receiving approved tuition funds in their personal bank accounts.
NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, explaining that the new arrangement was developed to address cases where students paid their fees without knowing that the fund had already settled the bills.
According to Sawyerr, delays in communicating completed payments have left some students paying the same fees twice, forcing them to seek refunds from their institutions.
“We discovered that there were some issues with students being informed in good time that their payments had been made by NELFUND, which meant that some of them would pay because they hadn’t realised that NELFUND had paid already,” he said.
He explained that a student could pay their fees independently to meet a school’s deadline, only to discover days later that NELFUND had already made the payment.
Using an example, Sawyerr said the fund could pay a school on Monday, while a student who was unaware of the transaction might pay the same fees by Wednesday and only learn about the earlier payment on Friday.
“It was a genuine error, no suspicion, no accusation, just genuine error,” he said.
The managing director said the new system would allow students to confirm and initiate payments themselves, reducing confusion and the need to recover money paid twice.
“We want to eliminate that need for refunds. So we’re placing the power of payment in the hands of the students,” Sawyerr said.
Under the proposed arrangement, students will receive notifications when their approved school fees are ready for payment. They can then use an application on their phones to authorise the transfer directly to their institutions.
The funds will remain restricted to the institution for which the payment was approved. Students will not be able to transfer the money to their personal bank accounts or redirect it to another school.
Sawyerr stressed that the system was designed to give students control over initiating payments without allowing them to use the funds for other purposes.
“We’re not giving the students money, but we’re giving them power,” he said.
He added that a student whose approved school fees amounted to N200,000, for instance, would only be able to authorise payment to the designated institution.
“If they don’t push the button, the money doesn’t go anywhere. It will never be able to be transferred to the personal account of the student or anybody else,” he said.
NELFUND Executive Director, Mustapha Iyal, also clarified that the token would not operate like a personal or mobile money wallet.
“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said.
He explained that each token would be linked to a specific institution, ensuring that the approved funds could only be used to pay that school.
Iyal confirmed that the tokenised payment system had entered its pilot phase, with the fund receiving nearly 400,000 applications under the ongoing process.
“As I speak to you, we already have close to 400,000 applications,” he said.
However, the officials did not clarify how many of the applications had already been processed through the pilot system. They also did not announce a date for its full implementation.
The new arrangement is expected to address a problem that can arise when students face school registration deadlines but have not received timely information about payments made on their behalf.
Where a student pays independently before learning that NELFUND has already settled the fees, the institution may have to process a refund after receiving both payments.
By allowing students to authorise payments and receive timely notifications, the fund hopes to reduce such cases and improve the coordination of payments between beneficiaries and tertiary institutions.
NELFUND administers the Federal Government’s student loan scheme established under the Students Loans (Access to Higher Education) Act, 2024. The programme provides eligible Nigerian students with interest-free loans to cover approved institutional charges and, where requested and approved, upkeep expenses.
Under the existing arrangement, approved institutional charges are paid directly to students’ institutions, while upkeep allowances are transferred to students’ bank accounts.
The proposed token system focuses on payments for institutional charges and should not be confused with the existing process for paying approved upkeep allowances.
Since the scheme launched in May 2024, NELFUND has disbursed N206.29 billion in student loans to more than 1.16 million beneficiaries out of 1.73 million applicants, according to the figures provided.
As the programme expands, the new payment arrangement is intended to improve accountability and reduce errors that can leave students struggling to recover money they have already paid.
Its effectiveness will depend on how well NELFUND, schools and students coordinate payment approvals, notifications and records, particularly during periods when institutions set deadlines for fee payments and registration.